Photographer: Nadine Hutton/Bloomberg

Billionaire Agarwal to Boost Anglo Stake by Up to $2 Billion

Updated on
  • Indian businessman set to become U.K. miner’s top shareholder
  • Agarwal calls it a personal investment, no plans for takeover

Anil Agarwal, an Indian mining billionaire, is buying 1.5 billion pounds ($2 billion) worth of additional Anglo American Plc shares, increasing his stake in the blue-chip British miner that’s benefited from a recovery in commodity prices.

Agarwal said Wednesday the purchase, which is the equivalent of about 9 percent, was a family investment and he doesn’t intend to make a takeover offer for the company, according to a statement. It comes on top of the 12.43 percent stake he’s built since an announcement in March that his Volcan unit was investing in the company.

The Indian tycoon, who is set to become the largest shareholder ahead of South Africa’s Public Investment Corp. after the purchase, offered to merge part of his mining empire with Anglo American last year, only to be rebuffed. The London-based mining group has been seen as a candidate for a potential breakup through splitting some of its South African assets from the global mining business.

"We are encouraged by the performance of Anglo American since our original investment earlier this year," he said in the statement. "The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust."

Anglo American shares rose as much as 3.7 percent and were up 2.7 percent by 11:38 a.m. in London. Before news of the sale, the stock had climbed 12 percent this year.

The purchase will be funded by a mandatory exchangeable bond, issued by his family holding company and secured by Anglo stock. JPMorgan Chase & Co., which advised on the previous purchase, is the sole bookrunner on the transaction. The sale closes on or around Oct. 10 and the bond matures in 2020.

The bond pays a 3.875 percent interest rate annually, with the first payment due in April. It has a minimum exchange ratio of 90.9 percent, according to the deal terms. Neither the issuer nor bonds are expected to be rated.

A spokesman for Anglo American declined to comment.

Anglo American’s shares slumped to a record low in London in early 2016 as weak metal prices focused attention on its debt position. Chief Executive Officer Mark Cutifani announced a plan to radically shrink the company through asset sales, but reversed the strategy early this year after recovering commodity markets revived profits.

Since then the company has returned with a renewed sense of ambition, surprising investors with an interim dividend and promise to grow. Debt, which brought Anglo to its knees during the crisis of 2015, has been almost cut in half over the past year, and is already below its year-end target of $7 billion.

Anglo American, a company founded by the storied Oppenheimer dynasty in South Africa a century ago, is one of the world’s top five mining groups, alongside BHP Billiton Ltd., Rio Tinto Group, Vale SA and Glencore Plc. Its key assets include copper mines in Chile, iron ore operations in Brazil and South Africa as well as De Beers, the iconic diamond producer.

— With assistance by Thomas Biesheuvel

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